Kingsway Arms Retirement Residences Inc. Provides Business Update

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Kingsway Arms Retirement Residences Inc. (TSX VENTURE:KWA) (the "Company" or "Kingsway") provides the following business update:

The Company filed its unaudited quarterly financial statements as of June 30, 2012 on August 29, 2012, which statements can be viewed on SEDAR.

The Company held its Annual General Meeting on Thursday, August 23, 2012 having previously filed the requisite documentation and notices, which can be viewed on SEDAR. At the AGM, the shareholders elected the following six directors:

At the AGM, the disinterested shareholders also approved the proposed fixed stock option plan that was disclosed in the Information Circular previously circulated to the shareholders.

a.

Dan Amadori, as Chair of the Board.

b.

Bruce Dimytosh, as Chair of the Audit Committee; Don MacKinnon and Dan Amadori as the other members of the Audit Committee.

c.

Frank Rossi, as Chair of the Compensation Committee; John Mackinnon as the other member of the Compensation Committee.

On August 29th the Company received final acceptance from the TSXV of the Company's stock option plan as approved by the disinterested shareholders at the AGM. Upon acceptance of the stock option plan, on September 1, 2012, the Directors approved the issuance of 1,475,000 stock options to officers, directors and employees as below:

The options have a strike price of $0.10 per share and have a term of 5 years through August 31, 2017. The options are fully vested upon issuance.

Subsequent to the issuance of these stock options, the Company has 2,440,800 stock options outstanding.

Further to the press release issued on July 23, 2012, the Company advises that the 500,000 common shares and warrants purchased by Dan Amadori as of that date are subject to a hold period until November 24, 2012.

The Company continues to evaluate potential acquisition opportunities and continues its efforts to secure additional financing for such acquisitions.

About Kingsway Arms Retirement Residences Inc.:

Kingsway is the owner of senior housing facilities located in Aurora, Ontario and in Clarington, Ontario. The Corporation continues to actively pursue the acquisition of development of additional senior housing facilities in order to grow the Company's portfolio of properties.

Safe Harbor Statement:

This press release contains forward-looking statements. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. In particular, factors that could cause actual results to differ materially from those in forward-looking statements include: our inability to obtain additional financing on acceptable terms; risk that our facilities will not gain widespread market acceptance; inability to compete with others who provide comparable facilities. Forward-looking statements speak only as of the date made and are not guarantees of future performance. We undertake no obligation to publicly update or revise any forward-looking statements. When used in this document, the words "believe," "expect," "anticipate," "estimate," "project," "plan," "should," "intend," "may," "will," "would," "potential," and similar expressions may be used to identify forward-looking statements.

This press release is not an offer of securities for sale in the United States. The securities of the Corporation referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended. Securities of the Corporation may not be offered or sold in the United States absent registration or an exemption from registration.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this press release.